TMI Blog2014 (5) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... tc. are contrary to his finding of facts on the issue. In this background, the stand of the assessee has been that the Assessing Officer’s observation as regards the books of accounts, mistake of quantification of credits, summations, etc., are facts. These observations ought to have not been brushed aside by the CIT(A). According to us, this approach is not justified. The authorities below should give finding on each and every point while reaching to its conclusion. Return filed based on books of account and income declared was reflected based on cogent reasoning - The main objection of the Assessing Officer has been that there is long gap of 28 months for retracting by way of return while there was no threat or coercion during search - HELD THAT:- For A.Y. 2004-05, source of funds for Ghanawat land deal were claimed from agricultural income and gift from relatives. The Assessing Officer has observed that the agricultural income was not sufficient considering Ghanawat land deal, hence, the said argument was not accepted. While in appeal, the CIT(A) in para 13, page 22 observed that considering the lavish life style of assessee, the agricultural income of ₹ 1.95 lakhs w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... file of the Assessing Officer with a direction to decide the same as per fact and law and after providing due opportunity of being heard to the assessee. - ITA Nos. 2191 to 2193 & 1502 to 1504/PN/2012 - - - Dated:- 27-5-2014 - Shri Shailendra Kumar Yadav, Judicial Member, And Shri R.K. Panda, Accountant Member For the Assessee : Shri Kishore Phadke For the Department : Shri S.P. Walimbe ORDER PER SHAILENDRA KUMAR YADAV, J.M: All these appeals pertain to the same assessee on similar issues for different assessment years, so they are being disposed off by this common order. 2. In ITA No.2191/PN/2012 for A.Y. 2004-05, the assessee has filed the appeal on the following grounds. 1. The learned CIT (A)-I, Pune has erred in law and on facts in confirming the addition made by learned AO ₹ 1,73,000/- as against returned income of Nil . 2. The learned CIT(A)-I has erred in law and facts in confirming the addition made by learned AO only on the basis of declaration made during the course of search without appreciating fact that the said declaration has been retracted by the appellant. 3. The learned CIT(A)-I has erred in law and facts in confir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant. 3. Alternatively and without prejudice to the Ground of 1 2, the learned CIT(A)-I, Pune has erred in law and facts in not giving effect of telescoping for the income declared during the course of search. 4. Alternatively and without prejudice to the Ground of 1 to 3, the learned CIT(A)-I, Pune has erred in law and facts not appreciating the fact that the AO did not allow the deductions claimed for various expenditures, including land cost, depreciation on cars, while computing the taxable income. 5. The appellant craves leave to add / delete / amend / modify all / any of the grounds. 2.3 In ITA No.1502/PN/2012 for A.Y. 2007-08, the assessee has filed the appeal on the following grounds. 1. The learned CIT (A)-I, Pune has erred in law and on facts in confirming the addition made by learned AO ₹ 60,85,737/- as against returned income of ₹ 5,65,997/-. 2. The learned CIT(A)-I has erred in law and facts in confirming the addition made by learned AO only on the basis of declaration made during the course of search without appreciating fact that the said declaration has been retracted by the appellant. 3. Alternatively and without prejudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee in deal of Sonigara, ignoring the fact that the same is not actually received by the assessee. 4. Alternatively and without prejudice to the Ground of 1 to 3 the learned CIT(A)-I, Pune has erred in law and facts in not appreciating the fact that on the basis of seized documents the addition ought to have been ₹ 32,50,000/- in Sonigara deal instead of ₹ 1,35,00,000/-. 5. The learned CIT(A)-I, Pune has erred in law and facts in confirming the addition made by learned in case of Sonigara deal without considering the affidavits filed by the assessee and without affording CROSS EXAMINATION of Mr. Sonigara to the assessee. 6. The learned CIT(A)-I, , Pune has erred in law and facts in confirming the addition made by learned AO amounting ₹ 15 Lakhs as undisclosed investment of the assessee without giving telescoping effect of the said amount received on sale Lexus car to Mr.Chachalani. Further, The learned CIT(A)-I has erred in law and facts in not considering the confirmation filed by the Mr. Chachalni regarding the same. 7. Alternatively and without prejudice to the Ground of 1 to 6, the learned CIT(A)-I, Pune has erred in law and facts in not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imately for block period for different assessment years as under: Sr. No. Asstt. Year Undisclosed income declared 1 2005-06 Rs.4.65 lakhs 2 2006-07 Rs.4.5 lakhs 3 2007-08 Rs.63.60 lakhs 4 2008-09 Rs.105 lakhs 5 2009-10 Rs.22.25 lakhs Total Rs.200 lakhs 3.1 It was further noted from the materials available that the assessee in his statement recorded u/s 132(4) on 13.8.2008, has further stated that the deposits appearing in the bank totaling to ₹ 1,47,20,808/- evidenced the cash received in Sonigara land deal of ₹ 32,50,000/- and amount received from the sale of Lexus car of ₹ 15 lakhs were taxable as undisclosed income. The Assessing Officer also noted that the assessee on 14.08.2008 u/s 132(4), in response to Question No.2 and 5 admitted to have received commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowledge of income tax law and other procedure. The income had been worked out after search for AYs.2003-04 to 2009-10 and returns accordingly have been prepared and filed. The Assessing Officer noted that the assessee has decided to retract the assessment without bringing any relevant materials for its cause after a gap of more than two years. The Assessing Officer has discussed this issue in detail in assessment order and has held that the retraction after a gap of 28 months cannot be accepted without bringing on record any materials which could show that the declarant assessee was subjected to any threat or coercion or inducement for giving the same. The onus is on the assessee / declarant to establish that the declaration was not genuine and under misconception of fact. The Assessing Officer was of the view that retraction cannot admitted. The Assessing Officer after considering the reconciliation has given finding that credit shown in the banks taken in the books of accounts constructed by the assessee after search on the basis of material found and the stand taken by the assessee is correct. 3.4 The Assessing Officer has also stated in the assessment order that the agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imately for similar reasons. Thus, the Assessing Officer has allowed the telescopic benefit to the assessee in respect of undisclosed household expenses, Denagi and Vargani of more than ₹ 60 lakhs found during search and also investment in house of approximately ₹ 20 lakhs. 3.5 Finally, the Assessing Officer after considering entire facts and circumstances of the case, computed total income of assessee for different assessment years on the basis of declaration made and certain other documents seized, details of investment and expenses found after giving telescopic effect wherever possible in the following manner. The following table shows the declaration of undisclosed income, return of income and assessed income for different assessment years involved in the block detailed as under: Sr. No. Asstt. Year Undisclosed income declared u/s.132(4) Income shown in the return u/s 153A Assessed income 1 2003-04 --- Rs.Nil No appeal filed by assessee 2 2004-05 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urist background and has sizeable agricultural income, where from the other activities of land dealing, commission activity were started. Considering the papers seized during search and since the books of accounts were not prepared by the assessee, summary of books and other transactions were prepared by investigating team. When the assessee was questioned on the basis of said summary, the assessee made declaration of ₹ 2 crores as discussed above. In short declaration during search was based on the following accounts: a) summations of credits in the bank accounts - ₹ 1,52,50,000 b) Income from sale of Lexus car - ₹ 15,00,000 c) Entry appearing in a seized document - ₹ 32,50,000 4.1 Regarding retraction of admission, the stand of the assessee has been that he prepared the books of accounts, based on bank transactions, property deals, expenses, cars acquisition transactions, etc. The agricultural income entries were also entered in the relevant books of accounts. Based on these books, final accounts were prepared. Computation of income was prepared from Profit Loss and return was filed. According to the assessee, this process took a very long pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indings, etc. are contrary to his finding of facts on the issue. In this background, the stand of the assessee has been that the Assessing Officer s observation as regards the books of accounts, mistake of quantification of credits, summations, etc., are facts. These observations ought to have not been brushed aside by the CIT(A). According to us, this approach is not justified. The authorities below should give finding on each and every point while reaching to its conclusion. 4.5 The next objection of assessee has been that the return filed based on books of account and income declared was reflected based on cogent reasoning. The main objection of the Assessing Officer has been that there is long gap of 28 months for retracting by way of return while there was no threat or coercion during search. According to the Assessing Officer, the onus of proving misunderstanding has not been discharged by the assessee. In appeal, the CIT(A) on this point has held that the retraction after 28 months is not acceptable. In this regard, the stand of assessee has been that the retraction is based on valid reasons of error or mistake, etc., hence, ought to have been deliberated on merit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been that the Assessing Officer himself agrees with the credit statement, so, the addition made and confirmed by the CIT(A), is not justified. For A.Y. 2006-07, the stand of the assessee has been that actual bank summations are ₹ 2.97 lakhs while declaration of ₹ 4.50 lakhs was based on erroneous assumption during search. The Assessing Officer has reproduced the assessee s statements, bank summations only ₹ 2.9 lakhs and not ₹ 4.5 lakhs, but further observed that as income disclosure in search is not honoured amount declared in search, is considered as taxable income. In appeal, on this point, the CIT(A) in para 22, page 30 observed that the declaration made during search could not be rejected on the basis of books created as self serving evidence. In this regard, the stand of the assessee has been that the books are made on the basis of bank statement primarily. The very same statement was used as basis for declaration during search. This mistake crept in assessment and appellate stage, which could not be cured. According to us, the facts on record should not have been ignored to justify addition mainly based on admission. 4.8 Regarding A.Y. 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gra. According to the learned Authorized Representative, both the authorities have not commented on this point. Further, in A.Y. 2009-10, the stand of the assessee has been that the assessee did not receive amount of ₹ 1.35 crores in cash from Sonigra. The Assessing Officer has observed that since Sonigra has paid taxes on ₹ 1.35 crores, the assessee must have received the same. The CIT(A) confirmed the order of Assessing Officer on the point. The stand of the assessee has been that the assessee has not received any cash from Ravet land deal from Sonigra. However, the assessee was in receipt of ₹ 33 lakhs for another land deal at Shinde Wasti which ultimately did not materialize. The said fact clearly emerged from the statement of Sonigra. These arguments of assessee have not been met out by authorities below. According to us, it is not justified. To reach a proper conclusion, it needs deep probe into the matter. It is pertinent to mention here that the person from agricultural background is not able to understand and meet out economic complications with income tax angle in fast urbanization. 4.10 The next issue raised by assessee is that Sonigra himself was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crepancy worked out by search party at the time of search. The action of the Assessing Officer in adding the income for above reason, in our opinion, is not justified. The CIT(A) has not appreciated this fact and merely dismissed the appeal without giving proper reasoning for the same. The books of accounts prepared after search should not be brushed aside. Once the books of accounts of assessee has been prepared based mainly on the bank entries and other details, same can be rejected by cogent reasoning. According to us, the books of accounts should be rejected only after rejecting the claim of assessee by cogent reasoning because the assessee s contention revolves around bank statement found during the course of search. 4.11 According to us, this whole issue should be looked into in the light of above discussion. So, we set aside the order of CIT(A) and restore the whole issue to the file of the Assessing Officer with a direction to decide the same as per fact and law and after providing due opportunity of being heard to the assessee. Similarly, the other additions with regard to land rights expenses, depreciation on cars, interest on loans and overheads and other land deal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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